According to Nuvama report, shortage of LPG (Liquefied Petroleum Gas) has posed a big challenge to India’s AC industry. Due to decrease in the supply of gas used in manufacturing, production is being affected and the costs of companies are continuously increasing. Due to geo-political tensions and supply chain problems, the government has given priority to domestic LPG, which has dealt a blow to the industry.
Direct impact on manufacturing
In making air conditioners, LPG is used for heat exchanger brazing, which is a very important process. Due to shortage of gas, many companies are facing interruption in production. Especially those companies are most affected, which cannot easily shift to other fuels.
The option is also expensive and risky
To continue production, many companies have started using oxy-acetylene gas. But this option is also not completely safe, because its production depends on crude oil and limestone, which are imported on a large scale. According to the report, about 94% of limestone in India comes from the Middle East, due to which there is a risk of supply.
Demand was also affected
The industry was already facing weak demand. Summer remained weak in 2025, while this year unseasonal rains in North India have affected the sales of ACs. In such a situation, the companies have been hit twice. On one hand costs are increasing, on the other hand demand is weak.
Price increase decided
To cope with the rising costs, companies have started increasing prices. LG Electronics India has increased the prices of room ACs by 10%, while other products have also become costlier. According to the report, overall prices may increase by 8% to 14%.
challenging road ahead
The weakness of the rupee and the new star rating rules have also put additional burden on the companies. Although brands expect modest growth in Q4FY26, both profits and revenues may remain under pressure for EMS companies.